Australia Tax Office (“ATO”) publishes it protocol on Legal Professional Privilege (“LPP”).

Introduction

The ATO has published its protocol regarding LPP. The document sets out the ATO’s recommendations for identifying whether communications are covered by LPP and how to make such claims to the ATO.

Aims of the protocol

The aim of the document is to provide guidance to the country’s taxpayers and tax advisers whenever they are asserting that LPP applies to a document in response to a requests by the ATO for information.

It does this by explaining the ATO’s recommended approach for claiming LPP and providing taxpayers with information on what they can expect from the ATO in different situations where they claim LPP. It is voluntary to follow the recommended approach.

The protocol is not intended to provide a legal analysis of the law of LPP in Australia, nor does it take the place of legal advice on what LPP claims are available.

Contents of the protocol

The document sets out how one should approach a claim for LPP.

The approach set out by the ATO can, it seems, be broken down into a three-step approach as follows:

1. Assess the nature of the taxpayer’s legal service and any communications to which the LPP claim relates;
2. Set out an explanation of the LPP claim; and
3. Advising the ATO of the process used for making the LPP claims.

The four addendums to the protocol

The document includes four ‘Addendums’:

• Addendum 1: This provides background information surrounding the types of circumstances in which a claim for LPP might typically be made.  It also sets out the roles of each of the main protagonists in a LPP claim, namely the ATO, the taxpayer and their advisers. Further, it also details the considerations for legal practitioners and specific concerns of the ATO;
• Addendum 2: This part provides information on how LPP might be waived by the taxpayer;
• Addendum 3: This addendum includes examples of how ATO might respond in attempting to understand, in respect of an LPP claim, what is the dominant purpose of a particular communication;
• Addendum 4: The fourth and final addendum presents advice received from the Government Solicitors around the waiver of LPP by the ATO.

What’s next?

We are told that the ATO will monitor the protocol in order to understand how it is used by taxpayers and their advisers. They will also review how effective it is in improving the standard of any LPP claims. Clearly, this process will feed into any future changes or revisions to the protocol and associated documents.

If you have any queries about this article, or Australian tax issues or tax matters in general, then please do not hesitate to get in touch.

The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.